{"id":714,"date":"2018-07-02T11:28:36","date_gmt":"2018-07-02T11:28:36","guid":{"rendered":"https:\/\/phoenixglobalgroup.com\/mi-katigoriopoiimeno\/airlines-see-outsourcing-of-cargo-as-a-sensible-option-in-terms-of-cost\/"},"modified":"2024-02-27T09:52:07","modified_gmt":"2024-02-27T09:52:07","slug":"airlines-see-outsourcing-of-cargo-as-a-sensible-option-in-terms-of-cost","status":"publish","type":"post","link":"https:\/\/phoenixglobalgroup.com\/el\/nea\/airlines-see-outsourcing-of-cargo-as-a-sensible-option-in-terms-of-cost\/","title":{"rendered":"Airlines see outsourcing of cargo as a sensible option in terms of cost"},"content":{"rendered":"
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By\u00a0James Muir<\/a><\/p>\n

Where once cautiousness in outsourcing business prevailed among carriers and a high degree of fragmentation were hallmarks of the GSSA industry, times have changed according to industry players, Donald Urquhart reports.<\/p>\n

\u201cNow more than ever,\u201d airlines see outsourcing of cargo as a sensible option in terms of cost saving and incremental revenue, says Air Logistics Group COO Stephen Dawkins.<\/p>\n

\u201cThey are looking for partners that are reputable, financially sound and can deliver in terms of revenue, network coverage and manpower,\u201d he says.
\nAs airlines continue to focus on cost control, revenue maximisation \u2013 which also means a core focus on their main passenger revenue stream \u2013 outsourcing demand will continue.<\/p>\n

\u201cGSSAs have naturally become outsourcing companies of choice for airlines, offering significant additional services such as trucking management, data capture, accounting and administration and IT development,\u201d he says.<\/p>\n

As for consolidation, European Cargo Services (ECS) CEO, Adrien Thominet notes the market is becoming less and less fragmented with a substantial trend toward consolidation now in motion.<\/p>\n

Dawkins notes that it is a natural progression in the GSSA industry: Just as airlines, freight forwarders and handling companies have consolidated over the last 20 years, the<\/p>\n

GSSA business is following the same trend, he says.<\/p>\n

But not all are upbeat on the consolidation trend, with new entrant into the networked GSSA world, 1GSA, taking a contrarian view. While observing, \u201cthe market is buoyant, and the opportunities for GSAs are growing,\u201d the problem according to 1GSA president, David Lee, \u201cis that there has already been too much consolidation\u201d.<\/p>\n

\u201cThe major groups are getting too big. The airlines don\u2019t like it when their GSSA is as big or bigger than they are,\u201d he says. Lee says the growth of the major groups has resulted in a lot of \u201chardworking, entrepreneurial GSA owners\u201d leaving the business and ultimately being replaced by branch managers.<\/p>\n

\u201cService has deteriorated. Airlines are now often forced to use GSSAs who represent conflicting carriers. Choice has been reduced,\u201d he says<\/p>\n

Fundamentally, he adds, airlines are not concerned with how large or small a local GSSA is, as long as they do the best possible job. And with airlines still tending to appoint station-by-station, rather than network-wide, the \u201cswallowing small and highly-motivated independents and turning them into branches of major network operators is not necessarily what the airlines want,\u201d Lee adds.<\/p>\n

But for ECS, which has frequently been in the news over the last few years for the acquisitions it has made, Thominet is keen to highlight that the \u201cvery selective\u201d acquisitions \u201ctends towards expansion, the dynamics remain true to the ECS spirit.\u201d<\/p>\n

The importance lies in knowing how to integrate these partners, he adds. \u201cIt\u2019s above all, a question of consolidating an already existing relationship. We don\u2019t buy up GSAs \u2013 we invest in a long-term relationship.<\/p>\n

The GSAs that join ECS are first and foremost dependable partners, longstanding friends, men and women with whom we share values,\u201d he says.<\/p>\n

He cites the example of Singapore\/Bangkok-based AVS GSA which was acquired in July 2016.<\/p>\n

\u201cToday, they are perfectly integrated into our group. They participate in our board meetings, it\u2019s with them that we develop our business strategy in Asia, and it\u2019s with them that we are building the future. We unite our respective expertise to advance together,\u201d he says.<\/p>\n

Integration is good, he adds, as it enables different cultures and operations to be combined. This has major benefits for the combined sales network, he says, citing the example of business generated in Asia on companies departing out of Europe, for instance.<\/p>\n

For Dawkins there is another key development that has been occurring in the industry in recent years: Airlines are now realising the value, \u201ca large, well-financed and resourced organisation can bring\u201d.<\/p>\n

\u201cAirlines launching a new route do consider their existing suppliers because contracts, bank guarantees and compliance are already in place. More and more airlines are offering multi-country contracts because it just doesn\u2019t make sense to have numerous different GSSAs,\u201d he says.<\/p>\n

A GSSA has to listen to the client\u2019s needs and invest in what the client wants. Airlines see that and understand that we want a long-term partnership. We aim to secure our airline partners over the long term,\u201d Dawkins says of the Air Logistics Group business.<\/p>\n

\u201cThe whole cargo business has become more professionalised and airlines know that we know the market well \u2013 so we can sell capacity at the right rate for the airline.\u201d<\/p>\n

But selling is no longer the only a requirement of a GSSA, with airlines knowing exactly where their business is. What they demand, he says, is an organisation that can knock on the door of companies where that business is.<\/p>\n

Arguably a much smaller player than either of the two big global GSSAs, 1GSA is nevertheless growing and spreading awareness of its brand after only one year of operations.<\/p>\n

\u201cIt\u2019s still very early days, but we have added more members, now 16 countries, with a number of further interested parties who are expected to apply.<\/p>\n

\u201cWe would like to get to 50 members by the end of this year, but that may be a little ambitious,\u201d Lee adds.<\/p>\n

And while 1GSA\u2019s world map may have lots of blank spots on it, Lee says there are no real geographic priorities, as \u201call new members deliver new opportunities. Our priorities are finding the right kind of members, of the appropriate high calibre.\u201d<\/p>\n

\u201cWe recently secured an airline contract for one of our members, and we are working on a number of other multi-station opportunities. Our members are actively pursuing opportunities for themselves and for the network as a whole, and these are certain to bear fruit in due course,\u201d he says.<\/p>\n

Lee also notes that two recent industry events yielded positive results, saying \u201cairlines are starting to sit up and take notice of 1GSA. We have had some very positive dialogue with leading carriers, and a number have said that they really like our concept of uniting and supporting independents, and making it easier to do business with them,\u201d Lee adds.<\/p>\n

For ECS, Asia \u2013 where much of its recent expansion has taken place, remains the core target \u2013 but the group is also pursuing other growth markets, like Latin America, where Paris-based ECS has just acquired a majority stake in the Brazilian GSSA, BCS.<\/p>\n

\u201cIt\u2019s the leading GSSA in the country and our partnership has been up and running for years. We are delighted and honoured that this incredible team is joining our group. Our combined expertise will enable us to transform freight in Brazil,\u201d Thominet adds.<\/p>\n

For the Air Logistics Group, Dawkins says it is comfortable to grow its business organically, continuing to focus its efforts on expansion in Asia.<\/p>\n

In the meantime it is very focused on building a worldwide network with a solid IT platform to service its airline and forwarding clients, he says.<\/p>\n

Source:
\nhttps:\/\/www.aircargoweek.com\/outsourcing-consolidation-future\/<\/a><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

By\u00a0James Muir Where once cautiousness in outsourcing business prevailed among carriers and a high degree of [\u2026]<\/span><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[31],"class_list":["post-714","post","type-post","status-publish","format-standard","hentry","category-nea","tag-2018-el"],"yoast_head":"\nAirlines see outsourcing of cargo as a sensible option in terms of cost - PHOENIX GLOBAL FREIGHT GROUP S.A. - Since 1991<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/phoenixglobalgroup.com\/el\/nea\/airlines-see-outsourcing-of-cargo-as-a-sensible-option-in-terms-of-cost\/\" \/>\n<meta property=\"og:locale\" content=\"el_GR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Airlines see outsourcing of cargo as a sensible option in terms of cost - 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